Market stays on lively pace; Homes: Despite some adverse conditions, prospective sellers are forgoing the help of Realtors and buyers remain eager to find the perfect home.

THE BALTIMORE SUN

The Sunday drive begins with the battle gear resting on the car's passenger seat: a street map and a newspaper in which a highlighter has pinpointed the open houses.

After a few stops, it doesn't take long to get a sense of what's happening on the front lines of Baltimore's real estate market.

There are the anxious for-sale-by-owner types, the FSBOs, brazenly going it alone without the help of a real estate broker. Then there is the couple with their year-old son, regretting they didn't buy sooner when they thought they had found the perfect home. And the wife whose frustration with the maddening pace of the market was finally put to rest when a contract she and her husband submitted was accepted.

Last Sunday, Michael Meyer was sitting on the front porch steps of his Towson home with his son, Stefan, and wife, Maridsa, enjoying the sunshine.

There were cookies and lemonade awaiting potential buyers for their three-bedroom, two-bath home that sits in the popular Rodgers Forge school district, which makes the house a hot property.

"I've sold two houses in the past and have used the same Realtor," Michael Meyer said. "I know he does a good job, but with the market being this strong, why not at least try this first?"

He bought the 60-year-old house that backs to St. Joseph Medical Center eight years ago for $175,000. He's asking $225,000, and in the first weekend that he has held his house open, he said, he's gotten 25 calls.

"The market definitely motivated me. I felt this was the best time for getting the best price," he said. "We have people sitting in traffic [going to St. Joseph], seeing the sign and calling from their cars.

"Of course, the reason why we didn't use a Realtor was because of the fees. You're talking about $15,000. We're planning on buying some property and some land, and that extra $15,000 is a lot. There are things that you can do with the extra money."

By week's end, Meyer said, he had rejected two offers from buyers who had to sell their homes before they could buy his. Yesterday, he had scheduled another open house, and he's prepared to do likewise this coming weekend, if he needs to.

A few miles north in Sparks, Saeed Ghahramani, the dean of science and mathematics at Towson University, is taking a crash course in being a real estate agent, trying to sell his Loveton Farms townhouse for $172,500.

Ghahramani and his wife, Lili, who bought the townhouse new 11 years ago for $142,500, are moving to Massachusetts. Ghahramani is taking a position as dean of arts and sciences at Western New England College.

"Originally, we had no intention to sell it by ourselves," Ghahramani said. "I interviewed two real estate agents, and most of our friends and neighbors told us there was no need to sell through a Realtor, because it is a seller's market and we can sell it ourselves very easy."

They said that they had almost 10 people come through the house but are awaiting an offer, and they plan to have another open house this weekend and next before turning it over to a broker. The couple admit that they "are not comfortable" with handling a transaction but are relying on assurances of support from neighbors.

Tom Mooney, an agent with the Timonium office of O'Conor, Piper & Flynn ERA, understands the flourishing of the FSBO market.

"I have seen more people using the discount brokers, I have seen more of that going on," Mooney said of those firms that for a flat fee will place a home in the multiple listing database used by brokers. "And in this market, that is not a problem with the sellers. I would do it myself if I had the wherewithal to understand the contracts."

The FSBO market is just another avenue Mooney taps to be able to find a house for one of his buyers.

"We provide a service for people, we find them the right house," he said. "Most of these FSBOs, they will compensate an agent. ... They just don't feel like paying the whole boat [traditionally 6 percent or 7 percent of the purchase price], if they don't have to."

When this year began, most industry experts didn't believe that the existing homes market could maintain its hectic pace of the previous year, the best in a decade in Baltimore, with almost 31,000 homes sold. Indeed, it hasn't, with year-to-date sales declining slightly more than 4 percent. However, March's pending sales, an indication of future activity, rose 4.46 percent over the same period last year, indicating that the demand for housing remains vibrant.

The pool of buyers, according to agents, continues to overflow, because the inventory of homes to choose from has dwindled to its lowest point in five years.

Fluctuating rates

Mortgage rates, which were near 7 percent a year ago, spiked above 8.5 percent last summer but have drifted downward in the past few weeks, toward the 8 percent mark. But the higher rates don't seem to have had a braking effect on demand; nor has upward pressure on home prices, which continue to outpace inflation. Last month, the average sales price was $154,962, up 4.37 percent over March 1999.

"I've never seen interest rates go up and the housing market get better," said David Desser, an associate broker in the Pikesville office of Prudential Carruthers Realtors.

The increasing pool of buyers has been buoyed by an easing of credit and terms by lenders, according to Keith Gumbinger, vice president of HSH Associates, a New Jersey firm that tracks and analyzes mortgage markets.

Gumbinger said mortgage programs are being offered that allow borrowers 103 percent of the purchase price.

"So, you don't even have to come up with any money down or even money for closing costs," he said. "What you need to have is a job, and you have to have not screwed up your credit rating too much.

"The walls that used to keep some folks out of the market -- rising interest rates, lack of a down payment, or 'I need some more time to get closing costs together' or 'My confidence about my job is pretty bad' -- all of those barriers have fallen down one at a time over the last couple of years," Gumbinger said. "So, what you are doing is adding in a lot of potential demand to the market, and homes only come up for sale so fast.

"The barriers to getting credit that used to keep so many of those people out of the marketplace have fallen down, and that has let the borrowers wash in."

That is where the law of supply and demand has taken over.

Last year, in highly desirable neighborhoods, it wasn't uncommon for buyers to bid well over the asking price. This year, the same is true, but with a twist: In some instances in which competition is keen, buyers are forgoing the traditional home inspection. "I've seen people drop a number of contingencies," said Arthur Davis, president of Chase Fitzgerald & Co. Inc. in Roland Park. "I think you have to be very knowledgeable, very savvy, before you are completely willing to remove the home inspection contingency.

"One of the unfortunate side effects, because people feel such tremendous pressure, is that they don't spend so much hard time with the house. They go through and they look at the competition, the people that are there. If you are in a hurry, you don't notice that the gutter is falling away from the house."

Depending on the property, Davis said, the results of a home inspection might cost a seller $2,000 to $5,000 in concessions to a buyer. If the buyer understands the costs, he might be willing to skip the inspection and be prepared to absorb those costs.

"Even if you waived the home inspection, you probably are fairly safe in 90 percent of the cases," Davis said. "But you are not covering yourself for the disastrous situation ... that's what makes me nervous about it."

Another aspect that is being removed is the financing contingency stating that if a buyer can't qualify for a mortgage, the contract can be voided. Instead, according to Desser, if a buyer is pre-approved for a mortgage or if approval isn't a concern, the contract is written for cash, making it more appealing to a seller.

The frustrated buyer

But, before putting in a contract, you have to find a house.

Kevin and Sandra Kempske and their year-old son had just taken a tour of a Swiss Chalet-style home off Chestnut Avenue, across from Loyola High School.

An interesting home, they said, but one that had only three bedrooms and was on a smaller lot. "The problem is that we are very picky," Kevin Kempske said. "I'd love to be able to find a two-story Colonial with a big garage. Three or four bedrooms, two to three bathrooms. ... The upper end would be $300,000."

The couple, who live in a Cromwell Valley townhouse, began to look for a new home two years ago, just as Sandra Kempske became pregnant with their first child. They thought they had found the perfect home just off Providence Road around Thanksgiving 1998. But, with a child on the way, they thought the best move was not to move.

"There is one we talk about weekly ... a Colonial that was on the market for either $289,000 or $284,000, and it was beautiful, move-in condition," Kevin Kempske said. "I think we are sorry that we didn't make that move."

Now that they are back in the market, they are suffering through sticker shock.

"In the last two years, most of the houses in the areas that we are looking at have appreciated by about $30,000," Sandra Kempske said, mentioning the neighborhoods of Riderwood, West Towson and Stoneleigh. They've considered purchasing a lot, but "the homes have appreciated so much, you have to question, if you did find the lot, could you build what you wanted."

Jenny Wingrat's search for a home in Stevenson came to an end when Desser, her third agent in less than a year, successfully negotiated a contract.

"There was never much to look at, and there was this sense of urgency that if you don't get there first, then someone else is going to get there and buy the house. People were just buying whatever there was to buy," said Wingrat, who admitted that when she and her husband began looking, they took their original agent's assessment of the market too lightly.

"You figure that it was a sales push," she said. "Salespeople like to create a sense of urgency in whatever they are selling. The two big things were: There really wasn't much to look at, and then it really turned out to be true that things would sell, it seemed like, within a couple of days of hitting the market. It was like a big frenzy: 'I gotta get there.'"

Moving slowly

Wingrat finally realized that the first two agents she worked with weren't getting her in to view properties as quickly as she would have liked.

"In this market, you need a real aggressive Realtor who is going to be keeping up on everything as soon as it hits the market," she said. "The Realtor that I was with before didn't even check the listings on a regular basis. I was telling her [about homes]. I would drive around and see a sign and tell her. She wasn't keeping track of what was coming up, and it was too late."

Desser understood Wingrat's concerns.

"You have to be aggressive in your dealings," Desser said. "A lot of people are very frustrated. They've written five or six offers ... and they can't get any of them to work. They go to see a house that has already been sold.

"Someone is in here checking every hour for updates," said Desser, who added that his fellow agents are aware of what their clients are looking for, and if it shows up, "Boom. We call [them], and they take off from work and we go look at it, because if we don't go look at it, then you miss it."

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